GIBSON GREETING CARDS

Laurent L Jacque

Chapter 13 in Global Derivative Debacles:From Theory to Malpractice, 2015, pp 217-220 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Gibson Greeting cards are more likely to conjure images of Santa Claus than being associated with Wall Street's daring and possibly unscrupulous financial engineers. The Cincinnati, Ohio-based manufacturer of consumer products specializing in greeting cards and wrapping paper had sales revenue reaching $547 million in 1993 with profits of $20 million that same year. Gibson's unlikely and traumatic foray in the world of arcane derivatives was motivated by the desire to reduce funding costs. In 1991, Gibson had raised $50 million in fixed rate debt: the coupon interest rate was set at 9.33% with repayment of principal staggered over the period 1995 to 2001. When interest rates started to decline, Gibson unfortunately found itself unable to prepay the bond issue because of a restrictive clause in its indenture…

Keywords: Derivatives; Debacles; Options; Swaps; Futures; Forwards; Financial Engineering; Market Manipulation; Rogue Traders; Speculation; London Whale (search for similar items in EconPapers)
Date: 2015
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